As of February 5, 2013, the Registrant
has converted an aggregate of $3,460,497.80 of its existing 18% convertible notes, held in favor of its investors, Azure Trading,
LLC, Frost Gamma Corp, MKM Opportunity Mater Fund, Ovation Group, Inc. and others, into an aggregate of 2,306,998 shares of newly-issued
common stock, par value $0.0001 per share (the “Common Stock”). The basis of the conversion price was $1.50 per share
of Common Stock, taking into account the Registrant’s recent reverse stock split of 1 share for every 15 shares of Common
Stock outstanding.

Item 3.02

Unregistered Sales of Equity Securities.

The securities described in Item 1.01 above
were offered and sold in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act and Rule
506 of Regulation D promulgated thereunder. The agreements executed in connection with this sale contain representations to support
the Company’s reasonable belief that the Investor had access to information concerning the Company’s operations and
financial condition, the Investor acquired the securities for their own account and not with a view to the distribution thereof
in the absence of an effective registration statement or an applicable exemption from registration, and that the Investor are sophisticated
within the meaning of Section 4(2) of the Securities Act and are “accredited investors” (as defined by Rule 501 under
the Securities Act). In addition, the issuances did not involve any public offering; the Company’s made no solicitation in
connection with the sale other than communications with the Investor; the Company obtained representations from the Investor regarding
their investment intent, experience and sophistication; and the Investor either received or had access to adequate information
about the Company in order to make an informed investment decision.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

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